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Ocado Shares Slide as Kroger Reviews Automated Warehouses

The 2018 Ocado partnership to build 20 US depots has stalled at eight, prompting a reassessment of which sites work.

Image
An Ocado grocery delivery van is driven along a street in London, Britain, March 25, 2023. REUTERS/Toby Melville/File Photo
An undated handout photo shows Ocado technology at a Kroger fulfilment centre in the U.S. obtained by Reuters on June 15, 2022. Kroger/Handout via REUTERS/File Photo
Ocado has exported its technology around the world

Overview

  • Interim chief executive Ron Sargent told investors Kroger is conducting a full site-by-site analysis of its warehouse and distribution network and is taking a hard look at some automated facilities.
  • Ocado’s stock dropped by more than 11% in early London trading, with The Times estimating roughly £386 million was wiped off its market value.
  • Kroger signaled greater use of store-based fulfillment to improve speed and efficiency as it evaluates all options to lift profitability.
  • Performance varies by market density, with stronger results in high-density areas and slower customer adoption in lower-density regions, while Kroger reported a 16% rise in e-commerce in the latest quarter.
  • Eight of the 20 planned Ocado-powered U.S. customer fulfillment centers are operational and two more are expected this financial year, as analysts warn the review is a negative read-across that could mean fewer large CFC builds.